Tag Archives: Leipzig

In today’s eurozone crisis, it is little remarked upon that Germany has done financial bailouts before.

Nowhere is that more apparent than in Leipzig, one of the success stories of the former East Germany. Big companies such as Amazon and DHL, BMW and Porsche, have created thousands of jobs by moving operations to what is now an attractive business and cultural centre. New roads, rail links and a redeveloped airport have acted like magnets for investment. The population has increased by 10% to 530,000 over the past 10 years.

But Uwe Albrecht, the city’s deputy mayor, is under no illusions about who needs thanking for the sudden renaissance. “Without the financial boost from the transfers from the west, it would not have been possible,” he says, referring to approximately €1.3 tn (£1tn), which has flowed from west to east since reunification.

The enormous costs that the country has shouldered since the Berlin Wall fell in 1989 have pushed many to the limits of their generosity. Richer regions are complaining about constantly having to fork out for poorer states via the federal system of equalisation payments, and Bavaria has even filed a complaint with the constitutional court.

Uwe Albrecht has what he calls a wonderful problem. In his office in Leipzig’s fortress-like town hall, the deputy mayor says the city’s population has grown so much in the past decade that he is having to build more kindergartens and schools.

“Ten years ago we were talking about closing schools,” he said.

Now Leipzig is one of the success stories of reunification. New roads, rail links and a redeveloped airport have sucked in investment and international companies. But none of it would have happened without a colossal 20-year bailout that has already cost the west €1.3tn. “Without the transfers from the west, it would not have been possible.”

With Europe slumped in an existential crisis, looking both desperately and fearfully to Germany to supply the leadership and the money to match its clout as the EU’s central power and biggest economy, it is often forgotten that Berlin is a past master at financial bailouts. Which is why it is also weary of them.